In addition, MDFC is entering into a new revolving credit facility with capacity of $150 million that is expected to be $75 million drawn upon closing.
The primary considerations for the ratings of MDFC include:
the lack of geographic diversification and single-site nature of the stand-alone MDFC credit profile;
The discretionary FCF may be used for some absolute debt reduction and provides some cushion that underpins Fitch's Stable Outlook on MDFC.
The MDFC rating upgrades primarily reflect the improvement in the financial and operating fundamentals of parent MD, but are also supported by the enhanced profitability and asset quality measures at MDFC.
MDFC employs a matched funding emphasis and traditionally utilizes commercial paper to a modest extent.
While no support agreement between MD and MDFC exists, the implied support and interrelationships between MD's Douglas Aircraft Company (Douglas Aircraft) and MDFC are important components of the rating.
Since the early 1990s, MDFC has focused on its two core business lines, including aircraft finance and commercial equipment leasing.
MDFC agreed to a 28-month lease payment deferral with TWA beginning in September 1994 under which the airline is current.